The acquisition of Globetrotter, the leading German outdoor retailer, contributed the largest part of sales expansion for the Fenix Outdoor International group for the third quarter, but the company's outdoor brands and its retail operations in Sweden and Finland all generated organic growth.
Fenix acquired a majority stake in Globetrotter last year through a 60 percent shareholding in Frilufts Retail Europe, which bundles Globetrotter with Naturkompaniet in Sweden and Partioaitta in Finland, the two outdoor retail chains already owned by Fenix. Fenix bought out the minority shareholders in Frilufts earlier this year.
The Swiss-based group's sales from operations jumped to €136.6 million, up from €76.5 million. Its operating profit advanced by 21.4 percent to €27.2 million, but this includes an extraordinary capital gain of €3.0 million relating to the divestment of Globetrotter's stake in Transa Backpacking, the Swiss outdoor retailer in which Scott Sports' chief executive, Beat Zaugg, acquired a majority stake a few weeks go.
Even with this €3 million gain included, the group's operating profit amounts to a margin of 19.9 percent for the quarter, down from 29.3 percent in the year-ago period. Some of this deflation could be explained by structural changes relating to the acquisition of Globetrotter, leading to a decrease in the percentage of group sales generating both wholesale and retail margins.
The Fenix group's chief executive, Martin Nordin, described the result as satisfactory, given the currency situation and the impact of Globetrotter's acquisition. Rapid expansion and store openings in the U.S. came with inflated costs. Net profit slid by 1.7 percent to €17.7 million.
Led by Fjällräven and Hanwag, Fenix' brands division saw its sales increase by 5.4 percent to €60.7 million for the quarter. The operating profit of the brands, which further include Tierra, Primus and Brunton, declined by €0.5 million to €21.2 million.
The retail division more than trebled its sales to €75.8 million, due to the consolidation of Globettrotter, but Fenix pointed out that Naturkompaniet and Partioaitta did better than expected. The entire retail division managed an operating profit of €8.0 million, compared with €2.1 million for the same quarter last year, which was without Globetrotter.
Adding the first three quarters of the year, the retail division's sales amounted to €193.5 million. About €141.6 million came from Germany. The company did not provide any comparison with the previous year and declined to comment on its sales performance, but restructuring measures are progressing according to plan. Globetrotter reportedly chalked up sales of €206 million for the fiscal year until the end of February 2014.
Naturkompaniet delivered a turnover of €33.7 million, up by 12.0 percent, while Partioaitta's sales reached €16.9 million, up by 7.6 percent despite the unfavorable retail climate in Finland. The retail division's operating profit amounted to a loss of €7.6 million for the nine months, compared with a loss of €0.3 million for the same period last year.
The brands division's sales reached €146.9 million for the nine months, an increase of 8.1 percent, with an operating profit rise of 7.4 percent to €40.8 million. The turnover was up in all areas other than Germany, because sales to Globetrotter have become internal sales. The brands' sales advanced by 26 percent in Sweden and 3.8 percent in other Nordic countries, 5.0 percent in the Benelux countries and 6.8 percent in other European markets. The brand's sales in other markets amounted to €8.1 million, up by 11.0 percent, driven by Asian markets. However, these other markets exclude North America, where sales soared by 47.7 percent to €29.1 million for the nine months.
To support the growth, Fjällräven moved to a new head office and distribution facility in Louisville, Colorado in July. The shipping capacity has roughly doubled compared with the previous location, which was in another part of the Boulder area. The company has also continued to open stores for the Fjällräven brand: 13 stores were trading in North America at the end of the quarter and two more should open before the end of the year.
The operating profit for the Fenix group slipped by 16.6 percent to €27.6 million for the nine months. This included the €3.0 million capital gain from the sale of the Fenix group's stake in Transa, but also restructuring costs of nearly €4.9 million for Globetrotter. Excluding both of these one-off factors, operating profit dropped by 10.9 percent to €29.5 million. Net profit landed at €15.9 million, down by 39.3 percent.
Separately, the Fenix group said that Hanwag, its footwear brand established in Germany, acquired a Hungarian supplier in October. The acquisition of this unnamed company specializing in shafts is aimed at broadening the partnership and reinforcing Hanwag's supply chain. It should not have any significant impact on the financial results for the full year.